Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: FRIDAY, June 30, 1995 TAG: 9506300056
SECTION: BUSINESS PAGE: A-11 EDITION: METRO
SOURCE: Associated Press
DATELINE: GENEVA LENGTH: Medium
The next conflicts in the pipeline, regarding Korean shelf-life laws and Japanese taxes on European liquor, provide distinctly less general interest. They will do little to raise the public profile of the new WTO as an authoritative trade judge.
They are also less politically explosive, however, and probably a safer bet for the WTO's untested dispute settlement mechanisms.
Trade negotiators in Geneva were divided Thursday about whether the settlement of the U.S.-Japan auto dispute was a victory for the fledgling WTO.
The United States had threatened to impose punishing sanctions on Japanese luxury cars unless Japan opened its markets to U.S. autos and auto parts. The two sides reached agreement Wednesday, just hours before the sanctions were to take effect.
Some argued the conflict's resolution sent a signal to Washington that the threat of sanctions would help bring reluctant trading partners to their knees.
Others said the near certainty of a WTO ruling that the proposed sanctions were illegal helped persuade Washington to compromise and accept voluntary plans by Japanese companies to boost American auto sales rather than push for iron-clad government commitments.
None of the diplomats questioned wanted to be identified.
WTO chief Renato Ruggiero, who was not actually involved in talks between the United States and Japan, had no doubt the settlement was a WTO victory.
``The WTO's dispute settlement system has done its job as a deterrent against conflict and promoter of agreement,'' the former Italian trade minister said in a statement late Wednesday.
``The WTO was virtually bypassed,'' disagreed Edward M. Graham, a senior fellow at the Institute for International Economics, a Washington-based think tank.
Japanese Trade Minister Ryutaro Hashimoto on Thursday visited Ruggiero with the official news that Tokyo would not haul the Clinton administration before the WTO to judge the legality of threatened U.S. actions.
At a press conference Wednesday, Hashimoto described the settlement as a victory for the WTO.
But U.S. Trade Representative Mickey Kantor studiously avoided reference to the WTO in describing the settlement and made it clear the United States would not drop its Section 301 trade law that provides for the use of sanctions to open markets.
The United States was expected to drop its threats to bring a wider complaint against Japanese auto market restrictions before the WTO.
``What we missed was an opportunity to test the system out,'' Graham said.
But some WTO insiders were relieved. Any WTO ruling against the United States would have seriously soured relations between the organization and its most powerful member.
The WTO was set up in January. It is meant to have tougher powers to settle disputes than its predecessor, the General Agreement on Tariffs and Trade. Governments cannot simply ignore or block WTO rulings.
With the auto conflict settled, the WTO's forthcoming disputes agenda is considerably flatter.
On top of the list is a Venezuelan complaint that U.S. environmental rules on gasoline keep out Venezuelan exports. That is still in the early stages, though a neutral arbitration panel has been set up.
Washington has started complaint proceedings against South Korea in the so-called hot-dog dispute. It claims Korean rules on shelf life, the length of time from manufacture of goods to their sale, are too stringent and designed to keep out foreign imports.
The European Union has asked for WTO-sponsored talks with Japan, complaining about Japanese taxation of Scotch whisky, Swedish vodka and other European liquors.
The other big U.S.-Japan dispute, which involves access for Federal Express cargo planes in the Far East, will not come before the WTO. Air services, like routes and landing rights, are not included in the international accord which set up the WTO.
by CNB